Tuesday, November 25, 2008

Designing the Post-Kyoto Climate Regime

The stalemate between developed and developing nations on who should do what and when in the battle against climate change only ever had one answer. The rich nations would have to cut CO2 emissions first. Developing countries would never back down from the arguments that (1) poverty reduction is the priority and (2) the rich nations caused the problem in the first place.

There can be only one solution. At least now academics at Harvard and around the world agree. The Harvard plan makes sense because it is the only logical solution. I suspect the timing of the "plan" is to give a broad hint to the incoming president. The key as always is the US. Europe is already planning and cutting.

Two excellent environmental economists, Jo Aldy and Robert Stavins are leading the project.

First is the PlanetArk report and then I provide the executive summary. It is interesting to compare and contrast.

The interim report is worth reading in full and contains papers from leading environmental economists including a series of papers discussing alternative international policy architectures from authors such as Ellerman, Frankel, Karp, Jaffe and others. Of most interest in the paper by Ellerman:

"EU Emission Trading Scheme: A Prototype Global System?"

Perhaps worth reading.

Harvard Project Proposes Rich Nations Cut CO2 First [PlanetArk]

LONDON - Rich nations should make the first cuts in greenhouse gases while developing countries carry on business as usual for the time being, according to a plan set out on Monday by a Harvard University project.

This is one of four proposals by the American university's Belfer Centre for Science and International Affairs to negotiators who meet for UN climate talks next week in Poland.

The current climate pact, the Kyoto Protocol, expires in 2012 and governments are scrambling to agree a new treaty by the end of next year.

"The new agreement should be scientifically sound, economically rational and politically pragmatic," Professor Robert Stavins of the Harvard Project on International Climate Agreements said.

The Harvard report calls on rich nations to lead in cutting emissions, while developing countries can "maintain their business-as-usual emissions in the first decades, but over the longer term agree to binding targets that ultimately reduce emissions below business as usual."


"The agreement should be cost-effective and consistent with the recommendations of the Intergovernmental Panel on Climate Change," Stavins said, referring to the Nobel Peace Prize-winning scientific body.

Observers hope a new pact will include the US, which did not ratify the original agreement, and commit developing nations like China and India to binding emissions targets.

"We need an agreement that can be ratified in the US Senate and provide increasingly meaningful roles for developing countries. We see those as essential ingredients," Stavins said.

Last week President-elect Barack Obama said the US would "engage vigorously" in climate change talks when he takes office next year.

Obama wants to reduce US carbon emissions to their 1990 levels by 2020 and cut them by an additional 80 percent by 2050.


The Harvard report proposes introducing national carbon taxes, linking emissions trading schemes or pursuing a series of simpler, possibly bilateral agreements that separately address the different gases and their sources as the other ways to fight warming.

"Countries will only participate in an international agreement if they believe they received a fair deal," the initiative said in a statement.

But the line dividing rich and poor nations set out in Kyoto may need to be redrawn, as the global economic landscape has altered in the past 10 years.

"If you look at the non-Annex I countries, 50 of them have higher per-capita income than the poorest Annex I countries," Stavins told Reuters.

The report said other key components of a new deal should promote clean energy technology transfer between rich and poor nations, reform Kyoto's emissions trading schemes and combat deforestation, something the original treaty failed to address.

It emphasized that any new deal must be compatible with global trade policy to prevent potential trade wars.

"Global efforts to address climate change may be on a 'collision course' with the World Trade Organization, as nations that have agreed to put a price on carbon look for ways to keep their companies competitive globally," the report said.

Citing the WTO as an example, the report suggests an independent international institution be set up to survey and review the policies, actions and outcomes of participating countries' climate change policies.

The report combines the work of 28 research teams from around the world, including China, India, the US and Europe.



An Interim Progress Report for the 14th Conference of the Parties, Framework Convention on Climate Change, Poznan, Poland, December 2008

From the Executive Summary:

A way forward is needed for the post-2012 period to address the threat of global climate change. The Harvard Project on International Climate Agreements is an international, multi-year, multi-disciplinary effort to help identify the key design elements of a scientifically sound, economically rational, and politically pragmatic post-2012 international policy architecture. Leading thinkers from academia, private industry, government, and non-governmental organizations around the world have contributed and will continue to contribute to this effort. The foundation for the Project is a book published in September 2007 by Cambridge University Press, Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World (Aldy and Stavins 2007). From that starting point, the Harvard Project on International Climate Agreements aims to help forge a broad-based consensus on a potential successor to the Kyoto Protocol. The Project includes 28 research teams operating in Europe, the United States, China, India, Japan, and Australia.

The work of the Project is being carried out in three stages. The first stage featured meetings with key domestic and international policy constituencies to discuss considerations regarding potential successors to Kyoto. The second stage focused on policy analysis and economic modeling to develop a small set of promising policy frameworks and key design elements. In the third stage, Project researchers are exploring key design principles and alternative international policy architectures with domestic and international audiences, including the new administration and Congress in the United States. This interim report identifies some of the key principles, promising policy architectures, and guidelines for essential design elements that have begun to emerge, building upon lessons learned from the 28 research initiatives.

Learning from Kyoto

Among the strengths of the Kyoto Protocol is its inclusion of provisions for market-based approaches — the three so-called flexibility mechanisms. A second feature of the Protocol is that it provides freedom for nations to meet their national targets and commitments in any way they want. Third, the agreement has the appearance of fairness in that it focuses on the wealthiest countries and those most responsible for the current stock of greenhouse gases in the atmosphere, consistent with the principle — first enunciated in the Framework Convention on Climate Change — of common but differentiated responsibilities and respective capabilities. Fourth, the fact that the Protocol was signed by more than 180 countries and subsequently ratified by a sufficient number of Annex I countries to come into force may be taken as an indicator of its political viability.

The weaknesses of the Kyoto Protocol also provide valuable lessons. First, some of the largest emitters are not constrained by Kyoto. The Protocol has not been ratified by the United States, and it does not include emissions targets for some of the largest and most rapidly growing economies in the developing world. Second, a relatively small number of countries are asked to take action, which has resulted in concerns about emissions leakage and competitiveness. Third, the nature of the Protocol's emissions trading elements has caused concern. The provision in Article 17 for international emissions trading among nation-states is unlikely to be effective, if it is utilized at all. And the Clean Development Mechanism (CDM) is plagued by criticisms that it is crediting projects that would have happened anyway (commonly known as the problem of "additionality"). Fourth, the Kyoto Protocol — with its five year time horizon (2008 to 2012) — represents a relatively short-term approach for what is fundamentally a long-term problem. Finally, the agreement may not provide sufficient incentives for compliance....

Click HERE for a PDF.


1 comment:

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